Q4 2024 JD.com Inc Earnings Call
Speaker Change: Hello, and thank you for standing by for JD.com's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session.
Speaker Change: Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Director of Investor Relations. Please go ahead.
Speaker Change: Thank you. Good day, everyone. Welcome to JD.com Q4 and full year 2024 earnings conference call.
Speaker Change: With us today, it's our CEO of JD.com, Miss Sandi Xu. She will kick up the call with her open remarks and our several Mr. Ian Shan will discuss the financial results. And then we'll open the call to questions for analysts.
Speaker Change: Before turning the call over to Sandy, let me quickly cover the safe harbor. Please be reminded during this call, our comments and responses to your questions reflect management's view as of today's only will include four looking statements.
Speaker Change: Please refer to our latest safe hopper statement in the earnings press release on our website, which applied to this call. Well discussed in non-GAAP financial measures, please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. Please also note.
Speaker Change: All figures mentioned in this call are in R&B, and less otherwise stated. Now, let me turn the call over to our CEO Sandy.
Sandy Xu: Thank you, Sean. Hello, everyone. Thank you for joining us today to discuss our Q4 and [inaudible]
Sandy Xu: In Q4, we delivered a strong set of operational and financial results with top-line growth accelerating back to double digits year-on-year and healthy bottom-line expansion, and in 2024, our very strong
Sandy Xu: On a few-year basis, our total revenues were up 7% young years, outpacing the growth of both total retail sales and online fiscal goods as reported by the NDS.
Sandy Xu: As our market share expanded, we remained committed to our operating philosophy of lowering costs, increasing efficiency, and investing in user experience with the continued financial discipline.
Sandy Xu: Fuyer and Ngang Gap Net Profit for 2024 also expanded steadily with Ngang Gap Net margin
Sandy Xu: We continued to invest proactively from long-term growth without making solid progress toward our long-term profitability target.
Sandy Xu: We saw strong double-digit growth momentum across most of our catch rates and revenue streams in Q4.
Starting with our electronics and home appliances category.
Sandy Xu: which saw a notable swing up swing with juveniles growing by a remark ball 16% young year.
Sandy Xu: Our unique advantages in supply chain, service capabilities, and user mindshare continue to set us ahead in these categories.
Sandy Xu: Head in to 2025 with the government's stimulus policies added to the payload, we are well positioned to benefit from this rebound in consumption.
Sandy Xu: Besides the strong momentum in electronics and home appliances, I'm excited about another bright spot in our business.
Sandy Xu: Our General Merchandise continued its strong performance in Q4 with revenue growth accelerating to 11% young year.
Sandy Xu: With the intensive efforts, we've invested in building the operating expertise and the massive market opportunities in both supermarket and fashion categories.
Sandy Xu: We believe our general merchandise is set to further expand, use their men's share, and renew the impetus.
Sandy Xu: We've been general merchandise. Our supermarket business revenues include four, four-up, double DJ Yang Yir for four consecutive quarters in a row.
Sandy Xu: This was partially due to the early start of the Chinese New Year promotion, but more importantly, even by the de facto improvement in our society capabilities.
Sandy Xu: In the supermarket category, ranging from selecting the right product mix, lowering procurement costs for improving promotional and fulfillment efficiency.
Sandy Xu: The supermarket category holds massive potentials, for JD in the long run, for both B2C commerce and on-demand retail, and we've just started to unlock it.
Sandy Xu: Our fashion category is also generating better momentum thanks to our persistent efforts to improve operations and consumer share.
Sandy Xu: For example, consumers are more excited about our offerings, showing higher shopping frequency and the merchants' enthusiasm towards the JD platform has also increased significantly
Sandy Xu: We will continue to invest in the area as it holds strategic importance for us, especially for further improving our user engagement and the marketplace ecosystem.
Sandy Xu: Throughout the past year, our team stayed very focused on improving user growth and engagement.
Sandy Xu: Price competitiveness and our platform ecosystem. The strong four-year results were consistent with the strategic focus that we have set out and a reflection of our effective execution.
Sandy Xu: Let me provide some updates on these key areas. First, I'll use the growth and engagement.
Sandy Xu: Q4 last year marked the fifth consecutive quarter of our quarterly active customers seen double digit year-on-year goals with growth accelerating further in the quarter.
Thanks for watching!
Joseph Feibier also trended up.
Sandy Xu: We saw user shocking frequency growing at double digits year for four quarters in a row.
The Strong User Matrix
Sandy Xu: even after the impact of the lower free shipping limit had flea lags.
Sandy Xu: for a result of our increase the low-press offerings and mixed shift towards high-frequency SKUs in the supermarket and fashion categories.
Sandy Xu: The Healthy User Momentum is keeping up so far in 2025, and we see a lot of user conversion
[inaudible]
Sandy Xu: In terms of JD Plus, shopping frequency of plus members grew even faster than that of our total users in Q4.
Sandy Xu: Our focus on enhancing our service capabilities and value proposition for our customers remains
Sandy Xu: In January , we announced further upgrades to plus members' benefits, including a lifestyle service package that allows members to redeem credits for housekeeping services.
Sandy Xu: and 180-day replacement over repair policy for our 1T electronics and home-owned products in case of quality defects.
Sandy Xu: We also expanded unlimited free shipping to cover on-demand shipping shopping of one of cheap products for plus members.
Sandy Xu: Moving to press competitiveness, we've made substantial headway in 2024 by both the improving press competitiveness for brand products and offering a broader selection of value for many products to address the needs of consumers across different income spectrums.
Sandy Xu: In particular, in Q4 and on a four-year basis, we saw growth of order volume and user base in lower tier markets, all parts that have higher tier markets on our platform.
Sandy Xu: Both our three-p-order volume and the number of our three-p users have maintained robust young-year increases over the past year with Q4 further picking up the pace compared to previous quarters.
Sandy Xu: NPS, the net promoter score of our 3D open, also continues to pick up in Q4, both and on a sequential basis.
Sandy Xu: As a result, our marketplace and marketing revenues were up 13% young year into four, a substantial acceleration from previous quarters.
Sandy Xu: To recap, we had a very productive year in 2024 with healthy expansion on both the top line and bottom line and effective execution of strategic priorities, bringing about tangible
Sandy Xu: On the back of our strong financial performance, we also delivered considerable returns to shareholders, through both bad bags and our annual dividend. Our total shareholder return rate for the year reached close to 10%.
Ian will share more color on this.
Speaker Change: Our strong results reflect our commitment to drive lower cost, higher efficiency, and best-in-class user experience. And now, we are racing to adopt new technologies, especially AI and industrial robotics.
to further automate many of our processes.
Please see the complete disclaimer at https://sites.google.com
Speaker Change: For example, we already have AI applications in many of our works scenarios.
Such as A.M. Marketing, A.I. customer service.
Developing superior algorithms for search and recommendations.
to increase traffic allocation efficiency.
Speaker Change: and AI-enabled streamlining of internal workflow, just to name a few. In particular, we have launched an AI shopping assistant called Ding Yan, a chat box that helps users to get personalized search results and recommendations.
Find best deals and discounts and compare products.
Speaker Change: In addition, we always try to improve our logistics automation level and have deployed proprietary industrial robotics in many key production segments in our fulfillment centers.
Speaker Change: which helped to improve operation efficiency and safety of our employees and lower fulfillment costs for JD and the entire industry.
Speaker Change: We are confident that city's business ecosystem offers a huge amount of user cases for AI adoption.
Speaker Change: which in turn will lead to further cost optimization, operating efficiency improvements, and ultimately give us more leeway to provide our users with a better experience.
Speaker Change: We remain confident in our business position and are increasingly optimistic heading into 2025.
Speaker Change: We expect to see better consumption trends, driven by the pickup in domestic demand, and operating efficiency, and user experience improvement powered by AI adoption.
Speaker Change: In addition, we see a compelling set of opportunities ahead of us.
driven by the sustained momentum in user growth and engagement.
Speaker Change: The vast potential in general merchandise and our progress in platform ecosystem building. Looking ahead, we remain committed to lowering costs.
Speaker Change: Increasing efficiency and improving user experience to deliver a sustainable growth in the long term with that I'll turn it over to Ian for our financial highlights. Thank you.
Thank you, Sandy, and hello, everyone.
Ian Shan: We had a very solid Q4 and 2024 with both top and bottom lines recording strong momentum.
Ian Shan: Particularly in Q4, revenues of both our electronics and home appliances and general merchandise categories return to double digital growth year-over-year.
Ian Shan: Throughout 2024, we stay focused on enhancing our unique supply chain capabilities to lower cost and drive efficiency, while continuing to make investment in user experience and user
We saw market share extension across many of our categories.
Ian Shan: and both our growth margin and non-GAAP net margin continue to expand Yian Ye in Q4 and for the full year of 2024. We are well on track to further strengthen our market position and move firmly towards our long-term profit target.
Ian Shan: While driving business groups, we continue to return value to shareholders. Our board has approved an annual cash dividend for 2024 of 0.5 US dollar per ordinary share of 1 US dollar per
representing a 32% year-on-year increase on per share level.
Ian Shan: The aggregate amount is expected to be about US $1.5 billion, which is subject to minor adjustments based on our total issued and outstanding shares by the record date.
Ian Shan: In addition, we repurchased a total of 255 million class A ordinary shares in 2024 equivalent
Ian Shan: Accounting for 8.1% of our shares outstanding as of the end of 2023.
Ian Shan: The increased annual dividend combined with a ongoing US dollar 5 billion share repurchase program reflects our commitment to retain value to shareholders as we have strong conviction in JD's long-term success.
Ian Shan: Now, let's go through our Q4 and 4-year 2024 financial performance.
Ian Shan: Our net revenues were up 13% year-on-year to RMB 347 billion in Q4, and up 7% year-on-year to RMB 1.2 trillion for the full year of 2024.
Ian Shan: of which, product revenues were up 14% and 7% year-on-year for the quarter and four year respectively.
Ian Shan: 5 categories. Electronics and home appliances revenues were up 16% year-on-year in Q4 and 5% for the full year.
Ian Shan: As the government's stimulus policies continue to kick in, we are well positioned to fulfill the demands of consumers nationwide, both through online and offline channels.
Ian Shan: General merchandise revenues were up 11% in Q4 and 9% for the full year of 2024, both representing a meaningful acceleration compared to respective previous periods.
Ian Shan: To break this down, supermarket revenues will up double-digit yuan a year, both for Q4 and the full year of 2024, while the fashion category also gathers things.
Ian Shan: This was driven by our persistent efforts to enhance operations and user experience.
Ian Shan: with English product supplies, better price, and more appealing service offerings.
Ian Shan: Looking ahead to 2025 and the long-term, General merchandise will remain an important group driver, with huge market potential and growing consumer mindset.
Ian Shan: Service Revenue School also accelerated to 11% year-on-year in Q4 and 8% for the school year of 2024.
Ian Shan: Within service, marketplace and marketing were up 13% and 6% year on year respectively, while logistics and other service were up 10% and 9% year on year for the quarter and the full year respectively.
Ian Shan: It's worth noting that, right-new growth of marketplace and marketing has sequentially accelerated every quarter in 2024.
Ian Shan: With both commission and advertising revenues, recording double-digit growth, Ye Ang Ye in Q4, it's a clear sign that our ecosystem is gaining traction among both our suppliers and merchants.
Now, let's tend to our segment performance.
Ian Shan: JD retail revenues were up 15% year-on-year in Q4 and 7% for the full year of 2024, thereby solid performance across many of our key categories.
Ian Shan: JD retail continued to see growth margin expansion year-on-year, a trajectory that has been sustained for the past 11 orders in a row. This strong track record has been primarily driven by the continued improvement of our supply chain capabilities.
and the favorable mixed ship towards higher margin revenue streams.
Ian Shan: JD retails gross profit extension well exceeded the mild increase in operating expenses particularly in marketing sense as we invested in user growth and share as a result.
Ian Shan: is now getting operating income continue to increase year-on-year, both in Q4 and for the full year of 2024. With now getting operating margin reaching 3.3% and 4% up 68 bits and 24 bits respectively.
Moving on to JD Logistics
Ian Shan: JD Logistics remnants were up 10% year-on-year for both Q4 and the full year of 2024. Both JD Logistics internal and external revenues saw double digit year-on-year growth in Q4 and similar growth pace for the full year 2024.
Ian Shan: JD Logistics further optimised its logistic network, closely integrated smart technology and increased the automation level of its operations to reduce cost and drive better efficiency.
Ian Shan: This led to a year-on-year increase in its now-gap operating income for both Q4 and the four-year-of-2024.
JD.169, Captain Operating Margin Rich,
Ian Shan: 3.5% for the quarter and on a full year basis as well.
Ian Shan: In 2025, JD logistics will further invest and enhance its capacity to handle increasing demand driven by the positive trends in both the market conditions and consumer
Ian Shan: We believe this proactive effort will set 3D logistics on a stronger footing for long-term development.
Ian Shan: Turning to new business, revenues of these segments are yet on yet decline of 31% in Q4 and 28% for the full year of 2024, largely due to things his business adjustments.
Ian Shan: Its widening non-depth operating loss was also attributable to Jinxi business, in line with our expectation as we further penetrated into lower tier markets with expanded offering of value for money products.
Ian Shan: Laura Tier Market remains a priority for us in 2025, as we are becoming more confident in broadening our user base there thanks to the progress we made in enhancing our product supplies and price competitiveness over the past year.
[inaudible]
Ian Shan: Our consolidated profit performance at the group level gross margin increased to 15.3% in Q4 and 15.9% for the four-year of 2024 Up 110 bits and 114 bits respectively
Ian Shan: The increase was driven by both JD retails and JD logistics cross-margin expansion.
Ian Shan: non-GAAP Net Profit attributable to ordinary shareholders, increased by 34% and 36% year-on-year in Q4, and for the full year of 2024, with non-GAAP Net margin of 3.3%, and 4.1% respectively.
Ian Shan: While we continue to allocate resources to improve user experience and foster future group drivers,
throughout 2024.
We did a good job in unleashing operating efficiency.
Ian Shan: upholding our financial disson and firmly moving towards our long-term profit targets.
Ian Shan: Our free cash flow for the full year of 2024 was RMB 44 billion compared to RMB 41 billion in 2023. This was driven by our enhanced profitability and moderated care packs.
Ian Shan: partially offset by cash outflow to secure supplies of key categories such as electronics and home appliances to keep up with the increasing demand in recent quarter.
Ian Shan: By the end of Q4, our cash and cash equipment restricted cash and short-term investment.
totaled RMB 241 billion.
Ian Shan: We are encouraged by our overall performance in 2024 with healthy expansions across both top and bottom lines.
Ian Shan: This set of results was driven by effective execution of our strategies.
Displained Investment, and Adduction of Technology, including AI and robotics.
Ian Shan: The improving macro environment and the solid ground work we built out.
Ian Shan: Confidence going into 2025, and we are optimistic for our healthy and sustainable growth over the long term. With that, I will turn it back to Sean. Thank you.
Speaker Change: Thank you, Ian. Okay, next for the Q&A session, you're welcome to ask questions in Chinese and English. Our management team will answer the questions in language you asked.
Speaker Change: We will provide English translation when necessary for convenience purpose only. In the case of any discrepancy, please refer to our management statement in the original language.
Operator, we can open a call for a Q&A session.
Speaker Change: Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we take one question at a time from each caller.
Speaker Change: If you have more than one question, please request to join the question queue again after your first question has been addressed.
Speaker Change: If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad.
Speaker Change: Your first question comes from Ronald Keung from Goldman Sachs. Please go ahead.
谢谢Sandy, Ian和Shawn。
Ronald Keung: As for JD Supermarket, in terms of this GDP support market, what are our main investments this year?
Ronald Keung: In addition, the country has continued and expanded the cosmic star exchange program for 25 years. In the first quarter, our 3C home appliances have grown. What is our current trend? In the second half of the year, if we face high technology and demand elasticity, it may start to decline. What measures will our company take to consolidate the market position of the category?
Ronald Keung: No, I won't thank you. Thank you, management for taking my questions. So, I want to ask how should we think about the JD growth drivers over this year and next year, maybe beyond the near-term strength in electronics and appliances, and we mentioned our supermarket, so what are our investment priorities.
Ronald Keung: this year for the supermarket category. And separately on the government expanded appliance now including electronic training programs. So how has the electronics and appliances category grown trended so far in the first quarter and in face of the higher base from the second half?
Ronald Keung: and maybe some of the diminishing, the monasticity from the program that Sarah from September last June . What are we doing to solidify this category leadership? Thank you.
Ronald Keung: Thank you, Ronald, for the question. First of all, in 2024, we, including the electrical category and the daily white goods category, can actually see that our main categories have achieved good double-digit growth.
Ronald Keung: We believe that the driving force is still JD.com's long-term investment in experience, cost, and efficiency, which releases growth potential and will continue to provide us with differentiated growth opportunities in the future.
Ronald Keung: Thank you, Ronald, for your question. You can see in 2024, we achieved solid, double-digit growth across most of our major categories, including electronics and home appliance and general merchandise.
Although the industry landscape varies across these categories.
Ronald Keung: The underlying growth driver is always JD long-term investment center around user experience, cause, and efficiency, which continues to unleash significant growth potential and generate differentiated growth opportunity for JD in the future.
Ronald Keung: In 2025, as everyone knows, the country will continue to vigorously promote and boost consumption efforts. We will also contribute to the country's efforts to stimulate consumption through our experienced supply chain efficiency and better services. At the same time, we are focusing on user experience and growth in the daily goods category.
Ronald Keung: In terms of form, ecology, and other directions, we will also actively deploy. Currently, we see that good progress has been made. We believe that these efforts in non-electronic categories and our driving forces will continue to drive the growth of JD's retail business in 2025 and beyond.
Ronald Keung: In 2025, the government aims to continue its effort to boost consumption.
We are very committed to contributing to government efforts.
Ronald Keung: by leveraging our own supply chain efficiency, superior customer service. At the same time, we are making proactive investment in general merchandise category, use experience and use the world and platform ecosystem which have already used some positive progress.
Ronald Keung: We believe this driver will continue to propel growth of the course of business in 2025 and beyond.
Ronald Keung: So in the daily necessities category, we are mainly strengthening the management capabilities of our own team, as well as
Ronald Keung: The user's new category system continues to be invested in, and we expect this category to continue maintaining a relatively good growth momentum.
Ronald Keung: To drive the number of users and activity to continue maintaining a healthy growth trend this year.
Ronald Keung: Additionally, in terms of the platform's ecosystem, besides our self-operated capabilities continuously strengthening, users' perception of JD's
The recognition of the 3P model is also deepening.
Ronald Keung: In the fourth quarter, the number of our 3P purchasing users and order volume continued to accelerate growth, both of which are faster than the growth rate of our retail market. Therefore, the increase in the overall ecosystem activity is also storing energy for our sustainable growth in the future.
Thank you. Thank you.
Ronald Keung: So, starting with General Merchant's category over the past period, we continue to improve our operating operational capabilities and category mind share, especially in soft market and fashion categories.
Ronald Keung: So going forward, we expect General merchandise category to maintain strong growth momentum.
Ronald Keung: In terms of user growth, as our user experience continues to improve both number of the QAC, the quarterly active user and shopping frequency have maintained double digit growth in each quarter over the past year.
Ronald Keung: We will continue to fine tune our user traffic operation to drive healthy roads in both our user base and user engagement this year.
in Platform Ecosystem.
Ronald Keung: You can see, besides our mind share of the user mind share in our 1P Direct Cell business model, continue to get stronger.
Ronald Keung: Our user recognition of JD-3P marketplace is also deepening. In Q4, the number of 3P active users and 3P auto-volume continue to accelerate, both outpacing the overall JD-retal segment
Ronald Keung: The improved ecosystem engagement is building good moments for us in terms of our long-term sustainable growth.
Thanks for watching!
Let me elaborate a bit more on this topic.
Vanilla category
[inaudible]
Speaker Change: I want to provide more color on supermarket categories, so over the past few years we have focused on improving the category operational capability and supply chain capabilities.
Speaker Change: and especially will further enhance our procurement and sales capabilities and category operation. Our goal is to provide users with more value for the money product across a broader price range.
Speaker Change: We have seen notable improvements in some key sub-category within the supermarket. Revenue growth has all-paced overall growth of super-category in double digit.
Speaker Change: Going forward, we will continue to improve operational capability of these more subcategories.
Speaker Change: Also, advancing fulfillment network planning and efficiency improvement as a key, will continue to work closely with JD logistic to develop fulfillment network model, tailored to supermarket category to lower the performance cost and improve delivery efficiency.
[inaudible]
Regarding the second question, since the second half of last year, the country has introduced
Speaker Change: This policy to boost various types of consumption has indeed achieved surprisingly good results in our view, and it has also gradually boosted consumer confidence.
Speaker Change: From the beginning of the year until now on our platform, we have indeed observed
The demand for mobile phones is warming up.
Speaker Change: So, since the second half of last year, the government introduced a series of consumption stimulating policy, and we have seen that the policy have driven steady recovery in consumer
Speaker Change: So since the beginning of this year, we saw mobile phone demand has rebounded and laptop PC cells remain very strong JD.
Speaker Change: Although, home applying sales early this year were temporarily affected as some of the sales were put forward to the end of 2024, but the sales of home appliances have shown the mount-a-mount acceleration Q1.
we
The specific measures to enhance this practice, as you mentioned, indeed started from the second half of last year because
Speaker Change: The switch to new policies has a relatively strong boost on home appliance sales, which will bring a relatively high base to the entire industry. However, we do see more upgrades in the home appliance industry, which is a long-term positive for the improvement of the industry structure.
Speaker Change: In terms of proportion, the sales volume achieved from replacements last year is still a very small proportion compared to our existing stock and charging stations.
Speaker Change: On how to enhance our market share, so as you just mentioned, since the second half of last year, government consumption supporting policy had effectively boosted home appliance sales.
Speaker Change: which potentially creates a high base for the industry. However, we see more long-term benefits of
Speaker Change: and part of structural change in the industry, as well as the vast potential demand.
and Least.
Speaker Change: by the Tritian Programme of Home and Pines. It's worth noting that the unit, the volume so compared to the total industry, market size is still very limited, so we are very confident to continue consolidating and expanding our market share, a market position.
Speaker Change: On one hand, we will continue to enhance our newly exchanged service capabilities.
Speaker Change: Allow consumers to enjoy a better first-level renewal experience to stimulate the potential demand for users to upgrade their devices.
Speaker Change: Reach users in the lower-tier markets through more channels to meet the needs of more users for upgrades and replacements. In addition, we will continue to drive industry innovation through user insights to stimulate consumer demand.
Speaker Change: So on one hand we'll enhance our treating service capabilities and provide consumer with better treating experience.
Speaker Change: will continue to stimulate potential demand for all the consumer goods upgrading.
Speaker Change: Additionally, we will leverage our supply chain advantage to reach out to more user in local markets through more channels, meeting their demand for trading services.
Speaker Change: Last, but not least, we'll continue to leverage our deep user insight to drive innovation in the industry and stimulate consumer sentiment.
We can take the next question.
Speaker Change: Thank you. Your next question comes from Kenneth Fong from UBS. Please go ahead.
Kenneth Fong: Hello, good evening, Sandy, Ian, and Sean. Thank you for accepting my question, and congratulations to the group on achieving such impressive green performance last year. We have seen that JD has always been very cautious and highly focused on ROI investment style, which led to a profit growth of over 30% last year.
Kenneth Fong: Since the beginning of this year, we have also seen JD.com increasing its investment in certain areas, including clothing and marketplace retail, among others.
Speaker Change: Then could the management also share the main strategies and scale of investment for our different sectors in the future? How does the management balance growth and the impact of investment on profit margins?
Speaker Change: Could the management also please share our strategy, positioning, and level of investment in collective retail? How will this affect the group's profit margin?
I will translate it for you
Speaker Change: We noticed that JD have been setting up investment in some areas like fashion, infant retail. So, can management share with us the strategy and scale of this investment of this new initiative? How would management balance the growth and profitability for these investments?
Speaker Change: A follow-up question is on food delivery. I noticed that recently we have been onboarding a new and high quality food delivery version with a CEO commission.
Speaker Change: So, can management share with us the strategy, positioning, and scale of investment for instant retail, and how would the Food Delivery initiative affect our margin and profitability? Thank you.
Thanks for watching!
Speaker Change: In 2024, we achieved healthy overall business growth and continued to invest in user experience and core competitiveness. The overall business foundation of JD.com and the market position of different segments have been strengthened.
Speaker Change: Thank you, Kenny, for your question. In 2024, we achieved healthy business growth and continued to invest in user experience and our core competitiveness. We saw stronger business fundamentals and market positions of our different segments.
Speaker Change: JD.com's business model is based on the supply chain, with user experience as the core, and investments will always revolve around these two main lines.
Speaker Change: This in turn leads to scale growth, efficiency improvement, and profit increase, allowing us to continuously invest in long-term development and form a positive cycle.
Speaker Change: At the same time, we are continuously optimizing the planning of network participation.
By adjusting routes and warehouse layouts, and then continuously investing in automation technology
Speaker Change: Reducing the operating costs of the entire industry is particularly important for supermarkets to continue enhancing their profitability. Currently, different business segments are at different stages, and their focus varies. Specifically, in relatively mature categories of electrical products,
Speaker Change: We will continue to enhance supply chain efficiency and leverage scale advantages to drive steady profit growth. In the daily goods category, while driving rapid market growth, we continue to improve profits, as mentioned earlier.
Speaker Change: The optimization of warehouse network layout is one of the important measures. Then, in the clothing category, we will continue to invest in strengthening users' perception of JD.com's clothing and further enhance the supply chain capabilities of clothing. We hope more users can learn about and choose JD.com's clothing.
Speaker Change: In terms of exploring new businesses, retail is actually a natural extension of JD.com's core retail business. It is currently in the early stages, and we will invest more effort in exploring differentiated business models and enriching high-quality supply.
Speaker Change: A JD business model is built on supply chain capitalities and centered around the user experience. Our investments will also focus on these two areas.
Speaker Change: This approach will further scale up our business, improve operating efficiency, and lead to profit expansion, which will enable us to invest in our long-term development, creating a virtual cycle.
Speaker Change: At the same time, we would be continuously optimizing our fulfillment network.
by streamlining our transportation rules and layout of warehouses.
Speaker Change: and the continuous investing in robotics technologies. We aim to reduce the fulfillment cost of the entire industry. This is particularly important for improving the profitability of our supermarket business.
Speaker Change: Currently, our businesses and segments are at different stage of development. Therefore, our priorities are different.
Speaker Change: For more established categories, such as electronics and home appliances, we will further optimize our supply chain efficiency and unleash the benefits to drive steady profit improvement.
Speaker Change: Within the general merchandise category for supermarkets, we are committed to driving robust growth momentum, while at the same time continuing to improve its profitability.
Speaker Change: As just noted, fulfillment network optimization is important for supermarket profit improvement.
Speaker Change: For the apparel category, we will continue to work on user-mind share and supply chain capabilities in order to gain awareness and preference among more users.
Thank you for watching!
in terms of our exploration in new businesses.
Speaker Change: On-demand retail is a natural extension of JD's core retail business. It is at an early stage now, and our focus is to explore differentiated business model and enrich our high quality supplies.
Speaker Change: Long-term health, sustainable growth, and active engagement are complementary. This year, we will continue to focus on our core business.
Speaker Change: The release of scale effects and supply chain efficiency in categories drives profit growth. At the same time, JD's past track record has repeatedly proven that we focus on the efficiency of investments and maintaining financial discipline, which will not change. We are confident in steadily progressing towards our long-term profit margin goals.
Long-term sustainable growth and a proactive ematement.
Compliment and support each other.
Speaker Change: In 2025, we will continue to leverage skill effects and supply chain efficiency in our core businesses and categories to drive profit improvement.
Speaker Change: Meanwhile, our track record has proved many times that our investments are ROI focused and follow stringent financial discipline. This approach will not change. We are confident to steadily progress towards our long-term margin target.
Thanks for watching!
Now I'm going to answer the second question about takeout.
Speaker Change: First of all, our strategic focus on retail has not changed. I suggest that everyone should not think about the instant retail or delivery business in isolation, but rather consider it in the context of JD.com's overall retail business capabilities and service experience.
The investment in real-time retail, including takeout, enriches our consumption scenarios.
打造能力
Speaker Change: Meeting user needs and enhancing user experience both have positive effects. From the perspective of consumption scenarios, instant retail is a natural extension of core retail business. Takeout is also one of the high-frequency services for users in the instant retail scenario, which can enrich the scenarios in which we serve user needs.
Provide higher quality supply, strengthen user trust, and increase activity to enhance user value.
Sandy Xu: This is Sandy, I'll answer your second question on food delivery and on-demand retail.
Sandy Xu: So, first and foremost, our strategic focus of retail business has never changed. I recommend you to that on-demand retail or food delivery should not be considered as a stand-alone business.
Sandy Xu: Instead, this should be viewed within the broader context of JD overall retail capability and service experience.
Sandy Xu: So, our attempt in the on-demand retail, including food delivery, should have a positive impact.
Sandy Xu: on enriching our consumption use case, establishing capabilities, meeting user, our user diverse demands, and enhancing our user experience.
Sandy Xu: In terms of consumption, use case, on demand, retail is a natural extension of our core retail business.
Sandy Xu: and Food Delivery is one of the high-frequency services within the on-demand retail business. It can enrich our service user service touch point.
Sandy Xu: provide higher quality offerings. So therefore enhance user's stickiness and engagement on our platform so in long term can increase our user value.
Teach from the perspective of capabilities to further reuse and enhance the existing local facility capabilities in our tourism services.
The ability to time more quickly and flexibly is part of JD's original 211 university fulfillment.
A powerful supplement to network and capability
Sandy Xu: Our goal is to improve the efficiency of the overall distribution network. Both our core e-commerce business and our instant retail business will benefit.
Sandy Xu: From the user's perspective, we also see that users indeed have a strong demand for quality takeout. Meeting users' differentiated needs can further enhance their trust in JD.com, which complements the mindset of our core e-commerce business.
Thanks for watching!
Sandy Xu: From the capability building perspective, we focus on further leveraging and enhancing our existing fulfillment and delivery infrastructure.
The faster and more flexible on-demand delivery capabilities serves.
as a strong complement to JD's efficient 211 fulfillment network.
Sandy Xu: and Ability, our goal is to improve the overall efficiency of the delivery network.
Sandy Xu: Both our core e-commerce business and on-demand ritual will benefit from this.
From the user perspective, we have observed the demand.
from our user for high quality food delivery services.
Sandy Xu: So meeting user's differentiated needs can further reinforce their trust in JD, complementing user's mind share of our core e-commerce business.
Sandy Xu: In terms of the rhythm and impact of investment, we will first focus on better meeting the needs of existing JD.com users and providing them with richer services.
Consumption scenarios and supply
Enhancing user frequency and loyalty, we will also rely on our high emphasis on food safety to enrich the supply of quality products through measures such as recruiting and supporting quality merchants and improving the rights of delivery personnel.
Gradually establish a differentiated user mindset for quality takeout.
Speaker Change: In terms of business rhythm, we will further develop differentiated capabilities and business models based on our existing e-commerce foundational capabilities. Currently, it is still in a relatively early stage of business development. We are making strategic and disciplined attempts and investments, and we will also adjust according to the gradual development of the business.
Speaker Change: We will dynamically adjust and communicate with everyone in a timely manner. In the long term, our goal is always to enhance shareholder value and the company's profitability.
Speaker Change: So regarding the pace and impact of our attempt in on-demand retail, first will prioritize serving JD existing user-based through expanding consumption scenarios and supply diversity.
Speaker Change: We have also observed the demand for a high quality food delivery, so with a stronger emphasis.
Speaker Change: On full safety, we target to reach supply of high-quality chain restaurants by recruiting and supporting premium merchants.
In enhancing the rewriters' welfare.
Speaker Change: This initiative will gradually establish a differentiated user-minded share of high-quality food delivery in terms of pace of the business.
Speaker Change: We will further develop differentiated capabilities and business models based on our existing e-commerce infrastructure.
Speaker Change: For food delivery, it's still in a very early exploration stage where making strategic and discipline experiments and emesements.
Speaker Change: So we'll retain flexibility to adjust our approach as the business involves.
Speaker Change: We will provide updates to investor analysts in a timely manner, but we will believe in the long term our objective has always been enhancing shareholder value and the company profitability.
Thank you. We can take the next question.
Speaker Change: Thank you. Your next question comes from Jialong Shi from Numura. Please go ahead.
Speaker Change: I'm not sure if we can predict the future of our business. This large-length model has been widely deployed by many Chinese Internet companies.
Jialong Shi: Just wondering what JD strategy on AI and has JD deployed or plan to deploy a large-known model to any of your business? What impact should we expect from AI deployment in the near and the long term? Thank you.
Thank you, Jialong, that's a very good question!
Jialong Shi: JD.com has consistently driven business innovation through technology to improve efficiency and help reduce costs.
Jialong Shi: We have already widely applied AI technology in many business scenarios. This is not only driven and encouraged from the top down by the company, but also initiated from the bottom up by many employees.
Hi, Jialong. That's a very good question.
Jialong Shi: So JD.com has always been active driving for business innovation, efficiency improvement and cost reduction to technology. We have widely adopted AI technology across various business scenarios.
Jialong Shi: which is driven not only by the top-down initiative from the company, but also the bottom-up adoption and utilization by our employees.
Thank you for watching!
Jialong Shi: Because of the characteristics of our business model, JD.com actually goes deeper into the supply chain, so we have more supply chain know-how and genetic data, as well as richer retail and supply chain application scenarios.
Then let's actively use AI technology to help us.
Jialong Shi: The search and recommendation system aims to effectively improve search satisfaction and traffic distribution efficiency. In addition, we have also launched an AI shopping assistant, Jingyan, and AI digital humans to provide users with more comprehensive product information and professional advice.
Reduced the cost of searching for and selecting products
Jialong Shi: So due to our differentiated business model, we have a deeper knowledge in supply chain. So our active ads option is leveraging this in-depth supply chain know-how and our operational data, as well as more diverse retail and supply chain use case.
So, just give you some example on-
Jialong Shi: Additionally, we have launched AI Shopping Assistant called Jingyan, an AI avatar to provide user with more comprehensive product information, professional recommendations, therefore lower the cost of search and select product for them.
Jialong Shi: In terms of tools provided to merchants, we also focus on product listing and order management.
Jialong Shi: Provided merchants with services such as 24/7 AI business agency services and business assistant tools, including sales forecasting, AI marketing placement, AIGC content generation platform, AI pricing, AI customer service, and other functions to help merchants improve operational efficiency and reduce costs.
Jialong Shi: In terms of helping merchants, providing tools for merchants, we have provided 24-7 AI-powered operation agency service and AI assistant tools for merchants.
Jialong Shi: covering the entire process from product launch, order management after cell service, customer support to data analysis.
Jialong Shi: AIG, AIGC platform for marketing content, AI pricing, AI customer service, and more. So these tools are helping our merchant enhance their operation efficiency and reduced cost.
Jialong Shi: Then in the management and fulfillment stages of the supply chain, AI algorithms can also help us improve the accuracy of demand and supply matching, and help us enhance the level of automation in logistics. In several key production stages at the logistics fulfillment center, they can help us improve the automation level of robots, reducing the fulfillment costs for JD.com and the entire industry.
is improving the accuracy of matching demand and supply.
Jialong Shi: and we also continue to increase the logistic automation level, we have deployed proprietary industry robotics in many of the key production segments.
Jialong Shi: in our fulfillment center to improve operating efficiency and lower fulfillment costs for JD and the entire industry.
Jialong Shi: 互动广泛应用AI来带动效率的提升 Welcome to the issue of highly active application AI for boosting efficiency 类似在内容的审核...
Jialong Shi: In specific workflows such as employee reimbursements, AI can be used to free up human labor. Additionally, R&D personnel can use intelligent programming assistants to write, read, and optimize code more efficiently.
Jialong Shi: To help improve R&D efficiency, thereby serving our users more effectively.
Thank you.
Jialong Shi: Also, at the same time, our team is extensively integrating, actively integrating, and into various
Davey Workflow and Processed to Boost Efficiency and Juice Cost
For example, AI has significantly enhanced productivity.
in specific workflow such as short video content reviews.
Jialong Shi: and employee reimbursement. Also, our developers are leveraging AI programming assistance to compel, read and optimize coding more efficiently.
Thanks for watching!
Thank you very much.
So, these AI and Technology Innovation and Applications
Jialong Shi: We are just started with this AI and Technology Innovation Applications.
Jialong Shi: There are many more to come, and AI is playing an increasingly important role within JD's overall operation, consistently enhancing user experience driving growth and improve efficiency over the long term.
Thanks for watching!
Thank you. Next question, please.
Speaker Change: Thank you. Your next question comes from Alicia Yap from City Group. Please go ahead.
Alicia Yap: Good evening, and congratulations on the strong performance. I have two small questions. One is that I would like the company to help us understand how we should think about the year-on-year growth of JD.com's electrical and daily goods categories in 2025.
Alicia Yap: The second question is, how should we think about the year-over-year growth rate for the electronic category versus the year-over-year growth rate for your general merchandise category for 2025? The second question is, can management...
Speaker Change: to update us on JD latest shareholder return progress and the thinking. Thank you.
Strong user mindset and differentiated competitive barriers.
Speaker Change: Different grades are in industries with different growth and development trends. In the JD retail market, they all continuously improve in product pricing and services to provide users with a better experience, thereby enhancing users' trust and perception of the entire JD platform.
Speaker Change: In Q4, the growth of our charging and daily revenue accelerated to double digits. Our user growth and service revenue also achieved double-digit growth, fully reflecting this point.
Alicia Yap: Thank you Alicia for your questions. First, over the years of development, JB has become a well-established e-commerce platform that covers all kinds of categories.
Alicia Yap: We have built user-mind share and differentiated competitive edge for both the electronics and home appliances and the general merchantized categories.
Alicia Yap: Dave French categories are also subjected to different growth and development trends within their respective industries.
J.D. retail business, so each category is joined to efforts.
Alicia Yap: to improve product offerings, price competitiveness, and providing better service to users, the JD platform as a whole will have stronger user trust and share.
Alicia Yap: Our Q4 results speak a lot about what I just said.
Alicia Yap: In the quarter, we saw double-digit growth across revenues of electronics and home appliances, also revenues of general merchandise, and our quarterly active customers, as well as our service revenues.
Alicia Yap: This year, in the category of electrical products, we will leverage our differentiated supply chain capabilities.
Alicia Yap: Using the advantage of understanding user mindset to serve more users, enhance user experience, and continuously gain market share. Of course, in the second half of the year, there will be some impact from a high base in home appliances. However, in categories such as supermarkets, clothing, home furnishings, and home decoration, it is estimated that this year's revenue will continue to maintain a rapid growth momentum, becoming an important growth driver for this year and the future.
Alicia Yap: In 2025, in terms of electronics and home appliance category, with our differentiated strengths in supply chain and user-mind share, we will be able to serve more users.
Alicia Yap: to improve user experience and continue to get market share while it is expected that this category will see such a high-grade impact in a second half over the year.
Alicia Yap: For general merchandise categories, such as supermarket, fashion products, and home goods.
Alicia Yap: We expect its robust growth of momentum to sustain in 2025. General merchandise will be our important growth driver for this year and going forward.
Alicia Yap: Ultimately, JD's growth is driven by multiple factors: user growth, the development of the platform ecosystem, and our exploration in categories and new businesses, all of which present growth opportunities and support our long-term sustainable growth.
Alicia Yap: In addition, D.D. has multiple growth drivers. We see opportunities in our user-based expansion, platform ecosystem development, and our explorations in categories and new businesses.
These will help to fill our long-term sustainable growth.
Regarding shareholder returns
Alicia Yap: In 2024, we are committed to returning value to shareholders through dividends and buybacks, primarily due to the improvement in our business health and profitability. The total dividends in 2023 amounted to approximately 1.2 billion USD, and we have just announced that the total cash dividends for 2024 will be 1.5 billion USD.
Alicia Yap: Each ADS reached 1 USD, with a year-on-year dividend growth of 32%. In 2024, we also accelerated stock buybacks, with a total annual buyback amount reaching 3.6 billion USD.
That reduced the number of outstanding shares by 8.1%
Alicia Yap: It will be used according to the plan within three years. We will continue to implement the annual preliminary encouragement policy, which also reflects this.
We have confidence in the long-term development outlook of JD.com.
Alicia Yap: In terms of a shareholder return, in 2024, we were committed to returning value to our shareholder through both dividends and buybacks. This was mainly attributable to our healthy business progress and profit expansion.
Alicia Yap: To recall, our annual dividend for the year of 2023 was $1.2 billion US dollars in every
Alicia Yap: and we just announced that the annual dividend for the year of 2024 would increase to around 1.5 billion US dollars.
Alicia Yap: which translated to one US dollar per ADS, representing 32% year-on-year increase on per share level.
Alicia Yap: In addition to that, we also accelerated the share buybacks in 2024. We bought back 8.1% of our outstanding shares for a total amount of $3.6 billion USD.
Alicia Yap: In 2025, we will remain committed to shareholder returns for the buyback. Our ongoing five-blading US dollar share buyback program will be fully used in three years as planned.
Alicia Yap: For dividend, we will continue to follow our annual cash dividend policy. This statement strength our confidence in JD's long-term development.
Okay, thank you. Next question, please.
Speaker Change: Thank you. Your next question comes from Thomas Chong from Jeffries. Please go ahead.
Thomas Chong: Good evening, thank you to the management for accepting my question, and congratulations on the strong performance. My first question is about the Spring Festival ceremony.
Speaker Change: You will find that the performance of subsidized home appliances and mobile phones is very good, and then we see that the marketing data also meets expectations. Could the management share some insights on the recent policy changes and consumer trends? My first question is about our profit outlook for 2025, and also our thoughts on profit margins in the coming years.
Speaker Change: Thanks management for taking my questions. My first congratulation on a strong set of results. My first question.
Speaker Change: He said that we have been seeing performance for training program and societies for home acquaintance and smartphones, we're doing well during the Chinese New Year. On the other hand, the retail sales data.
Speaker Change: The trend of steady growth includes the sales performance of the retail industry during the Spring Festival period.
Speaker Change: Everyone has seen the data for the fourth quarter, so I won't repeat it.
Namam.
Speaker Change: In the short term, from a macro perspective, I think there will still be certain challenges. However, in the long term, we remain optimistic about consumer sentiment.
Speaker Change: And especially in yesterday's government, work report, several economic goals was mentioned and with heightened instances on boosting consumption, particularly, you know, emphasizing on continuing the consumer trading program.
So
Speaker Change: Also, already this year, several indicator subjects that consumer market has continued
Speaker Change: So we have, on JD, we have also seen very similar improved consumer demand momentum, so
Speaker Change: Well, in short term, we believe there are still challenges on the macro side, but in the long term, we remain very optimistic about consumer sentiment.
Speaker Change: Ashwin China's consumption market is resilient with huge potential. The recent policy launched by the government will continue to take effect.
Speaker Change: and ultimately reach out to consumers and gradually boosting their purchasing power and willingness to spend, which will provide us with significant growth opportunities.
Thank you.
Speaker Change: Regarding profit margins in the coming years, first of all, for 2025, we will continue to improve supply chain efficiency in core categories to drive profit growth, while maintaining active and disciplined investments for long-term growth.
Speaker Change: Regarding long-term profit margins, as we communicated with everyone last time, JD's long-term profit margin target will reach high single digits. Last year's steady improvement in our profits has made us more confident in this goal. At the same time, we also see that there is still significant room for improvement in profitability in the future.
Thanks for watching!
Speaker Change: In terms of our future profit performance, first of all, for 2025, we will continue to improve our supply chain efficiency in core categories to unlock our potential in profit expansion. At the same time, we will continue to invest in our long-term growth with financial discipline.
Speaker Change: In terms of our long-term margin targets, as we shared before, we believe it will reach a high single-date level over time. Our steady profit expansion last year made us more confident in achieving this target.
Speaker Change: It also showed that we have a great room to further improve our profit performance.
Thank you for watching!
Maintain year-on-year growth, primarily driven by an increase in product gross margin and cost reduction and efficiency improvement in logistics.
Speaker Change: We believe in driving the industry chain to reduce costs and increase efficiency through continuously improving supply chain efficiency.
Speaker Change: Better service partners and users will naturally drive the improvement of our profits. At the same time, in terms of category enhancement, the profit margins of many categories, including supermarkets, still have room for improvement.
Thanks for watching!
Speaker Change: In the next few years, we will continue to focus on improving our supply chain efficiency to drive steady margin expansion.
Speaker Change: Specifically, our one-piece business model will help to improve our supply chain efficiency. JD's growth margin has been going up for 11 quarters in a row.
Speaker Change: This is mainly attributable to the increase in our product sales growth margin and the GT logistics optimization in cost and efficiency.
Speaker Change: We believe that as we continue to increase our supply chain efficiency, it will help to further reduce cost and enhance efficiency across the entire industry chain.
Speaker Change: This will not only enable us to better serve our business partners and users, but also lead to improvement in our profitability.
Speaker Change: In terms of better margin performance of different categories, we believe many of our categories including supermarket still have a lot of room to further uplift their margins.
Speaker Change: Even for more established categories, such as elapsed 20x and homo-pluses, there is room for further improvement as well.
Speaker Change: Finally, in terms of a mix of 3P versus 1P, as the proportion of our 3P business steadily goes up over time, it will also benefit our margin performance.
Speaker Change: We are now approaching the end of the conference call. I will now turn the call over to JD.com's and show and join the closing remarks.
Sean Zhang: Thank you for joining us on the call today and thanks for your questions. If you have further questions, please contact me and our team. We appreciate your interest in JD.com and look forward to talking to you again next quarter. Thank you.
Thank you for your participation in today's conference.
This concludes the presentation.
You may now disconnect...
Good day.
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